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European regulators delivered two helpings of bad news for US tech firms Wednesday (October 16). In the UK competition watchdogs have begun a probe into Amazon's investment in Deliveroo. Back in May, the online giant led a 575 million dollar fundraising round for the food delivery firm. Now the Competition and Markets Authority says it's looking into whether that will crimp competition. The deal was supposed to give Amazon a step up in its battle against Uber Eats. Deliveroo is one of Europe's fastest growing tech firms. It employs 60,000 riders in 13 countries to deliver takeaway food. Meanwhile chipmaker Broadcom - a major supplier to Apple - is in trouble with Brussels. Competition Commissioner Margrethe Vestager not pulling any punches Wednesday: (SOUNDBITE) (English) EU ANTITRUST COMMISSIONER, MARGRETHE VESTAGER, SAYING: "We consider that Broadcom is restricting competition by engaging in exclusive and quasi-exclusive dealing with key customers. Broadcom's behaviour would cause serious and irreparable harm to competition." As a result, she's ordered Broadcom to halt exclusive deals with six TV and modem makers for three years. She wants to investigate whether those agreements are intended to thwart rivals. Amazon and other tech giants may know how Broadcom feels. Vestager is infamous in Silicon Valley, after hitting U.S. tech giants with a series of multibillion dollar fines.
(Bloomberg) -- Terms of Trade is a daily newsletter that untangles a world embroiled in trade wars. Sign up here. Five months after the Trump administration blacklisted China’s Huawei Technologies Co., its business seems alive and well while American firms still don’t know whether they can work with the Chinese company or not.The Department of Commerce in May added Huawei to what’s known as the entity list in an effort to block U.S. companies from selling components to China’s largest technology company, which it accuses of being a threat to America’s national security. Huawei has denied those claims.Despite those actions, Huawei reported last week that its revenue grew 24% in the first ninth months of 2019, boosted by a 26% jump in smartphone shipments. There are also signs that U.S. efforts to block the company from the development of 5G technology have yet to make a big dent: Huawei said it has signed more than 60 5G commercial contracts to date worldwide.LicensesThe entity listing, which requires American firms to obtain a government license in order to sell to blacklisted firms, has caused complications for U.S. companies.Tech leaders and their lawyers have argued for months in closed-door meetings with Trump administration officials that the blacklisting of Huawei, one of their biggest customers, is detrimental to their businesses. Many industry executives are confused about the administration’s end goals and haven’t been able to get clarity on when license approvals will be offered despite those discussions, according to several people familiar with the matter.President Donald Trump said in June after meeting with Chinese President Xi Jinping in Osaka that he’d “easily’’ agreed to allow American firms to continue certain exports to Huawei. Weeks later Trump said he’d accelerate the approval process for licenses but none have been granted so far. The president as recently as this month green-lit the approval of licenses in a meeting with advisers, according to people familiar with the matter, but an announcement has yet to be made.The Commerce Department, in a statement, said it has received more than 200 license requests about Huawei and its affiliates. “Given the complexity of the matter, the interagency process is ongoing to ensure we correctly identified which licenses were safe to approve,” according to the statement. “Moreover, the Temporary General License remains in effect and was recently renewed.”Sales ImpactMicron Technology Inc.’s Chief Executive Officer Sanjay Mehrotra said in September that the lack of decision on its license applications could result in a worsening decline in sales over the coming quarters. The company gave a disappointing quarterly profit forecast last month, pointing in part to the Huawei restrictions. Broadcom Inc. in June also slashed its annual forecast, citing the U.S.-China trade war and disruption to its relationship with Huawei.One of the industry’s main arguments for allowing shipments of non-national security sensitive items is that Huawei can buy some of those components from competitors around the world, including South Korea, Japan and Taiwan.“Unless the ban succeeds in ‘killing’ Huawei, the result will be reduced U.S. global market share in a number of technology areas, something that will hurt, not help U.S. tech competitiveness,’’ said Robert Atkinson, president of ITIF, a Washington-based think tank.WorkaroundsSome firms have resumed shipments to Huawei even without a verdict on license requests. After a closer look at the rules since May, they determined they could continue supplying products based on an export control law. The rule doesn’t subject a product or service to the entity listing’s constraints if a company can prove that a piece of technology owes less than 25% of its origins to U.S.-based activities.Micron in June said it had resumed some memory chip shipments to Huawei. Intel Corp., the U.S.’s biggest chipmaker with plants in Oregon, New Mexico and Arizona, has as well. The company also has facilities in Ireland, Israel and China -- enabling it to argue that a chunk of the intellectual property in its chips isn’t created in the U.S.“We know many U.S. companies continue to ship to Huawei but do so using murky workarounds by way of other countries and third parties,’’ said Samm Sacks, a cybersecurity fellow at New America, a think tank. “It’s questionable whether the Huawei ban has helped U.S. national security so much as created a messy tangle of new problems.’’James McGregor, chairman of consulting firm APCO Worldwide’s greater China region, said he’s focused on what unintended consequences may result from the White House’s actions.“I’m worried about tech companies decoupling from America over time by removing some of their operations from the U.S.," McGregor said in an interview with Bloomberg Television Monday. “They have to look out for the long-term disruption of their business.”Atkinson cautioned not to over-interpret Huawei’s sales figures because the company has been stockpiling supplies for a while, in anticipation of the U.S. action. He said fourth quarter sales will be a more accurate indicator of the export ban’s impact, or whether the company has largely circumvented it.Huawei has said it expects U.S. export restrictions to reduce annual revenue at its consumer devices business by about $10 billion, in part because Google can no longer supply Android updates and apps from Gmail to Maps for the Chinese company’s newest handsets.U.S.-China DealTrump has indicated on various occasions that he’d be willing to consider removing the ban on Huawei for better terms in a trade agreement, drawing sharp criticism from China hawks on Capitol Hill.With the U.S. reaching a “phase one’’ deal with China earlier this month, the big question now is whether Trump will consider removing Huawei from the entity list or ease restrictions. When announcing the accord on Oct. 11, the administration said the issue wouldn’t be part of this initial pact but that it could be a part of phase two.(Updates with comments from McGregor.)To contact the reporters on this story: Jenny Leonard in Washington at firstname.lastname@example.org;Ian King in San Francisco at email@example.comTo contact the editors responsible for this story: Margaret Collins at firstname.lastname@example.org, Brendan MurrayFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
Over recent years, the Qualcomm (NASDAQ:QCOM) narrative has been dogged by various pressures and controversies. At first, Singapore-based Broadcom (NASDAQ:AVGO) proposed an aggressive $117 billion takeover bid for QCOM stock. But in a move that had bipartisan support, President Donald Trump axed the hostile takeover, citing national security concerns. That gave Broadcom little choice but to back down.Source: nikkimeel / Shutterstock.com The other pressing issue impacting Qualcomm stock was the underlying technology firm's legal battle with Apple (NASDAQ:AAPL). Notably, Apple had major grievances with Qualcomm's patent licensing practices. From its perspective, QCOM charged Apple royalty fees for technologies unrelated to the chipmaker.Famously, Apple CEO Tim Cook once quipped that Qualcomm's business practice was like "buying a sofa" from a company that charges "a different price depending upon the house that it goes into." On the other hand, Qualcomm accused Apple of using its patented tech free of charge.InvestorPlace - Stock Market News, Stock Advice & Trading TipsEither way, whether you're on team Qualcomm or team Apple, the bottom line was this: The bitter dispute didn't serve the longer-term case for QCOM stock or AAPL shares. While the former has the innovative prowess, the latter has the rabid fan base. This was a classic knife fight in which both sides were not going to get away unscathed. * The 7 Best Penny Stocks to Buy Fortunately, cooler heads prevailed, with both organizations squaring away their differences. From this new reality, I believe Qualcomm stock has a net positive pathway to steady upside gains.Clearly, the biggest distractions for QCOM stock have been eliminated. As InvestorPlaces's Chris Markoch stated recently, this is probably the beginning of the QCOM narrative. The 5G rollout will spark multiple revenue streams. 5G Opportunities Facilitate a "Slow Burn" for QCOM StockFirst and foremost, the settlement between Qualcomm and Apple creates growth opportunities for at least the next few years. As the leader in 5G modems, QCOM can fill a gap that has previously impeded Apple. Of course, this is a big positive for Qualcomm stock.However, this freshly restored relationship may change over time. In the backdrop of the legal battle, Apple looked to Intel (NASDAQ:INTC) to provide 5G modems. When that plan failed, Apple bought Intel's 5G modem business unit. It's going to take some time to catch up, but AAPL will eventually go in-house with its smartphone semiconductors.Luckily, the Apple business is just one component of the overall 5G picture for QCOM stock. Recently, Qualcomm revealed that it has partnerships with over 30 original equipment manufacturers to launch 5G fixed wireless access equipment. With a target time frame of next year, investors won't have to wait long to start seeing results.Utilizing Qualcomm's Snapdragon X55 5G Modem-RF System as a reference architecture, this 5G FWA equipment will facilitate home- and enterprise-level 5G internet service. What makes this FWA platform impressive is its modularity. Because it can accept "virtually any combination" of 5G spectrum and modes, telecom firms should be able to incorporate this tech into their existing 5G infrastructure.Granted, this might sound like granular nerd talk. However, the modularity of Qualcomm's FWA is crucial for Qualcomm stock. Contrary to what some might believe, the 5G rollout isn't a light switch. Instead, it's a gradual transition.Telecom firms must migrate the existing spectrum to accommodate 5G over time. During this transition, overlap between old and new tech will occur. That's why the FWA equipment's modularity is critical, which essentially provides a bridge for telecom networks. The Lingering Trade WarDespite Qualcomm's dominant presence in 5G and the opportunities that it presents, not everything is positive for QCOM stock. Most notably, the U.S.-China trade war presents a serious risk, not just to Qualcomm but the broader tech industry.In its most recent quarter, QCOM disappointed Wall Street with sour revenue figures. However, management didn't include licensing revenue with Huawei due to a royalties dispute. Moreover, the transition to 5G means less demand for 4G-related equipment.While the trade war may limit Qualcomm stock in the nearer term, ultimately, I see this situation as longer-term positive. I say this because for this particular circumstance, China needs Qualcomm more than Qualcomm needs China.As China and other emerging markets witness broader rises in consumer strength, they'll want the best. Thus, merely doing 5G as a technicality won't be enough. Clearly, QCOM is the 5G leader, which is why our international adversaries want to steal from it.As such, the trade war has exposed China's shady business practices while presenting American companies as virtuous victims. The drama may impact Qualcomm now, but again, in the long run, even geopolitics could be favorable to QCOM stock.As of this writing, Josh Enomoto did not hold a position in any of the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * The 7 Best Penny Stocks to Buy * 7 Bank Stocks to Avoid Now at All Costs * The 10 Best Mutual Funds for Your 401k The post Thanks to 5G, Qualcomm Stock Can Enjoy a Slow and Steady Ride Higher appeared first on InvestorPlace.
Missouri Republican Senator Josh Hawley tells Yahoo Finance's On the Move that Beijing is the biggest security threat to this country in the 21st century
(Bloomberg Opinion) -- Blacklisting by the U.S. government, accusations of espionage and the arrest of its chief financial officer haven’t been enough to scare investors away from Huawei Technologies Co. Shares of China’s biggest telecoms equipment and smartphone maker aren’t publicly listed, making its equity largely unavailable to outsiders. Its bonds, however, do trade and have continued their upward trajectory over the past year, impervious to Donald Trump’s best efforts to make Huawei the biggest scalp in his trade war with China. Four different series of U.S. dollar bonds, with maturities in 2022 through 2027, have climbed as much as 5.6% since a low in December. That’s a lot for fixed-income markets. Even a massive drop in May — when the Trump administration moved to ban U.S. companies from selling vital components to Huawei — was shrugged off by debt investors within a month. Each of those securities is now within striking distance of record highs.The concern at that time, and which persists even today, is that shutting off access to American products such as semiconductors and software would hobble the world’s second-biggest smartphone maker. U.S. companies including Qualcomm Inc., Broadcom Inc. and Intel Corp. supply parts used in electronics products that are difficult to substitute, especially given that China lags behind in chip technology. Even a ban on Alphabet Inc.’s Google from supplying bits of its Android operating system to Huawei was considered a major blow, since Android is used on more than two-thirds of smartphones. The prohibition follows the December arrest of CFO Meng Wanzhou, who was detained in Canada at the request of the U.S. over allegations that include lying about the company’s dealings with Iran.Debt investors brushed off these worries, perhaps believing that Huawei’s status as a national hero coupled with its deep technological abilities ensure that the company would be able to pay its debts. Huawei was sitting on $39 billion of cash and short-term investments at the end of last year, with just $10.2 billion in total borrowings, according to its latest annual report.That makes Huawei’s $4.5 billion in outstanding bonds a trifle. And in the context of a slowing Chinese economy and concerns about the pileup of debt throughout the nation’s financial system, Huawei looks like one of the safest bets around.Such bullishness was rewarded this week when Huawei announced nine-month sales figures. Rather than get strangled by all those forces working against it, the Shenzhen-based company posted a 25% increase in third-quarter revenue to 209.5 billion yuan ($30 billion), according to my calculations. That’s 5% less than the prior quarter, but not the apocalyptic scenario many had expected. Importantly, it managed to maintain the 8.7% net profit margin it posted in the first half, which is actually higher than the same figure for full-year 2018. All of this goes to show that no matter what the U.S. and the economy throw at it, Huawei will be fine. Or at least its debt holders will.To contact the author of this story: Tim Culpan at email@example.comTo contact the editor responsible for this story: Patrick McDowell at firstname.lastname@example.orgThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Tim Culpan is a Bloomberg Opinion columnist covering technology. He previously covered technology for Bloomberg News.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
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Chipmaker Nvidia is at the forefront of AI and machine learning, but earnings and share prices have dived. Here is what fundamental and technical analysis say about buying Nvidia stock now.
The EU claims the chip maker is restricting competition for its chipsets using exclusivity and bundling contract terms. The company will appeal.
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The European Commission said Broadcom , the world's leading supplier of chipsets used for TV set-top boxes and modems, is engaging in anti-competitive practices and ordered it to halt the practices. Broadcom is using clauses containing exclusive or quasi-exclusive purchasing obligations and granting customers commercial advantages conditional on the customer buying systems-on-a-chip for cable modems exclusively or quasi-exclusively, the regulator alleged. The Commission's use of injunction power was the first in 18 years, The Wall Street Journal reported. In a statement, Broadcom said it will appeal the ruling and that the ruling won't have a material impact on the set-top box or broadband modem businesses. "As we previously disclosed in an 8-K filing on June 26, 2019, Broadcom's contracts with the customers that the European Commission characterizes as exclusivity-inducing remain in force, other than the provisions at issue, and we intend to continue to support these customers going forward," the company said. (Updates with Broadcom's response.)
U.S. chipmaker Broadcom said on Wednesday that an EU antitrust order to halt certain business deals with six TV and modem makers will not have a material impact on its business and it will challenge the EU move in court. The European Commission earlier on Wednesday issued the order, the first issued against a company in 18 years, saying certain provisions in the deals could cause serious and irreparable harm to competition. "The principal effect of the Commission's decision will be to disrupt the efficiencies that Broadcom and European OEMs have achieved through strategic alignment," the company said, referring to TV and modem makers.
(Bloomberg) -- Broadcom Inc. was ordered to drop allegedly unfair clauses that may compel set-top box makers to use its chips, as European Union antitrust chief Margrethe Vestager deployed a rarely used weapon meant to prevent victims from suffering while probes drag on for years.Broadcom must end "anti-competitive provisions" in contracts within 30 days while the EU continues an investigation into allegations that the U.S. supplier forces six of its main customers to buy its chipsets. While the order announced on Wednesday is set to remain in force for three years or until the EU finishes its probe, Broadcom says it will ask an EU court to overturn it."The evidence that we have gathered from Broadcom’s behavior is likely to have severe negative effects on competitors before we could reach a final decision,” Vestager told reporters in Brussels. She said the so-called interim measures tool is "now on the table" and "if we find cases where interim measures would actually be the thing to do to prevent irreparable harm to competition then obviously we stand willing to use it."The EU hasn’t used interim measures in nearly two decades. The Broadcom move comes after criticism that EU probes into Google and Intel Corp. -- where the tool wasn’t used -- took so long that victims of unfair practices were thwarted by the time fines were levied.Court Fight"We intend to appeal the commission’s decision to the European courts and in the meantime comply with the commission’s order,” Broadcom said, adding that it doesn’t believe the contested provisions “have a meaningful effect on whether the customers choose to purchase Broadcom products."Officials said swift action was necessary because Broadcom’s conduct was likely to affect several upcoming tenders by telecoms providers and the introduction of the WI-Fi 6 standard for models and TV set-top boxes.Broadcom, based in San Jose, California, has also been targeted by U.S. antitrust scrutiny of WI-Fi and switch-chip markets, a probe covering the vast majority of its chip business. Broadcom has described that investigation as immaterial.The EU’s order would be "a landmark moment" for antitrust enforcement, especially if it’s backed by the bloc’s courts, France’s antitrust chief Isabelle de Silva said at a Paris event last week. The EU’s last attempt to use interim measures was halted by a court order in 2001. The regulator had required IMS Health to license data-collecting tools in Germany. The company later partly won a legal challenge that allowed it restrict some licenses.Arris International Plc was among the Broadcom customers to receive a questionnaire from the EU on chips in hardware used by the cable and satellite industry to provide television and internet to consumers, Bloomberg reported in October.(Updates with Broadcom statement in fifth paragraph.)To contact the reporter on this story: Aoife White in Brussels at email@example.comTo contact the editors responsible for this story: Anthony Aarons at firstname.lastname@example.org, Peter Chapman, Amy ThomsonFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
U.S. chipmaker Broadcom has been ordered to halt exclusivity deals with six TV and modem makers for up to three years while EU antitrust enforcers investigate whether these agreements are aimed at thwarting rivals. The move by European Competition Commissioner Margrethe Vestager suggests she may be more willing to take temporary but rapid action against tech giants deemed to be abusing their dominance rather than wait for investigations to be finalised. Google critics have for years urged Vestager to target the Alphabet Inc. subsidiary with such interim measures during its 10-year battle with EU antitrust regulators.
Broadcom was ordered Wednesday to stop its exclusivity deals with six TV and modem companies by European Union antitrust regulators who are investigating whether these deals hinder competition. The European Competition Commission has not made such a stopgap order in 18 years, according to Reuters. "It doesn't necessarily say that now we have all cases lined up where interim measures will be used but it means that the tool is on the table," European Competition Commissioner Margrethe Vestager said.
The EU has ordered US chipmaker Broadcom to suspend its exclusive deals with six television and modem manufacturers while it investigates whether they are anti-competitive. The move to apply so-called “interim measures”, which stop companies from engaging in suspected anti-competitive behaviour before the outcome of an investigation, is part of a new approach to tech regulation by Margrethe Vestager, the EU’s competition commissioner. The chipmaker must now pause its deals for three years, or until Brussels finishes its probe, a process which can also take years.
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Finding top semiconductor stocks to buy involves understanding the health of markets that purchase chips for their products. Chip stocks have risen on hopes for a late 2019 market recovery.